The Morning Call
5/16/17
The
Market
Technical
The indices
(DJIA 20981, S&P 2402) had a good day.
The S&P closed right on its all-time high while the Dow finished
below its comparable level (21228). Volume
rose; but breadth was mixed. Indeed, I thought
that breadth would have been stronger on a day that the S&P closed on its
former high. Nonetheless, both remain
above their 100 and 200 day moving averages and the lower boundaries of
uptrends across all major time frames.
Certainly, yesterday’s
pin action supports my assumption that the Averages will probably successfully
challenge their all-time highs (21228/2402); (1) don’t forget those unfilled gaps below and
(2) if the challenge is successful, the upper boundaries of their long term
uptrends [22623/2591] become the next objective.
The VIX (10.4) was
up fractionally, leaving it above the lower boundaries of its intermediate and
long term trading ranges. While it remains
below its 100 and 200 day moving averages, it still has a gap overhead that
would require it to trade at 12.2 to be filled.
There was no
clear pattern of trading in the long Treasury (lower: suggesting higher rates),
the dollar (down) and gold (up)---both suggesting lower rates.
Bottom line: the indices rallied yesterday and managed to
hold on to most of the gain. This is
clearly the start of an S&P challenge of its all-time high; though the Dow
still has a ways to go. Before we can start
anticipating a challenge of the upper boundaries of their long term uptrends,
the Dow has to confirm any break by the S&P.
Fundamental
Headlines
The
US economic data yesterday was mixed: the May NY Fed manufacturing index was a
huge miss on the downside while the May housing market index came in ahead of
expectations. Nothing from overseas. Nothing from the Fed. Only the daily distractions from
accomplishing repeal and replace and tax reform.
***overnight,
April UK CPI and PPI were higher than projected.
Bottom
line: I am not really sure what got investors jiggy yesterday and could keep
them that way to sustain a successful challenge of the indices all-time
highs. Higher oil prices? The only thing higher oil prices will do is
bring out more US shale production which will keep a lid on prices. Economic data? The NY Fed number was
awful. Yes, good news is good news and
bad news is good news and really sh*tty news is Christmas in July. But that assumes that the Fed will respond to
poor data by becoming more dovish. In
point of fact, the Fed has consistently ignored the deteriorating data for the
last three months while pushing its agenda of raising rates. Maybe that all will change; but why start
now? Improved odds of tax reform? Give me a break. What barriers the dems and the media aren’t
throwing up to the Trump/GOP fiscal program, Trump is doing himself.
Stocks
are overvalued. The economy continues to slip back toward zero growth. And somebody needs to take the gun out of the
Donald’s hand before he shoots off both feet.
My
thought for the day: flexibility is the cornerstone
of long term investing success and investors that are unwilling to adapt and
change are doomed to extinction – much like the dinosaur. Having a
methodology that acts as an operating system where all types of applications
can be used will separate you from the weak players and allow you to capitalize
on their mistakes.
Investing for Survival
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Economics
This Week’s Data
The
May housing market index was reported at 70 versus estimates of 68.
April housing starts fell
2.5% versus expectations of a 3.3% increase.
Other
The
unavoidable pension crisis (medium and a must read):
Politics
Domestic
International War Against Radical
Islam
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